Vet Prospective Vendors to Avoid Risk

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Vendor Vetting Risk

The constant four-letter-word for retailers is RISK.  Avoiding it. Managing it. Eliminating it. In today’s litigious business climate, it is not enough to point the responsibility finger elsewhere, retailers must ensure they have covered all bases and done so diligently–themselves.

When a retailer purchases product to resell to consumers they should ensure they are purchasing product from providers – whether distributors, manufacturers, or growers—who meet the retailer’s guidelines for risk management. That begins before the provider is even issued a vendor number and the first purchase order (PO) is cut.  How?

Eliminate unwanted risk. First, establish criteria that support a solid risk management strategy. Collection of required documents, such as business relationship contracts, indemnification insurance forms and facility audits to name just a few. This is the first step to vetting a vendor and the smooth on boarding of that vendor to a retailer’s risk management program. Having these in an easy to access, automated system is certainly a plus. Gone are the days of the paper filing cabinets.

Speedy cross-departmental approvals. Automatic submission of documents for the proper teams to review and the ability to transfer documents for review between teams is key to ensure that all teams are on the same page and the vendor has passed requirements before proceeding to the next step.  An automated system that enables uploading of required documents should also support this function.

Automatic tracking of progress. Knowing where in the process the potential new vendor is should be as simple as a notification generated to all interested parties.  This will ensure that lead time requirements and targeted delivery dates supporting new item promotions are not missed. Users with credential access may also want to view progress from within an application.

Maintain regulatory and business requirements. Once fully vetted and assigned a vendor number, placing the first PO is not the end of the story. Maintaining active business, risk management and regulatory documentation on that vendor is an ongoing process that ensures the retailer has met requirements established by their management or by industry regulation. Doing this takes on a cross-functional team perspective, so an online solution easily accessible by all credentialed personnel is the way to go.

Risk does not have to be a bad four-letter-word. If a vendor is vetted prior to engaging in business with them, risk can be managed to its lowest levels providing a safer, more transparent supply chain for everyone.

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